Correlation Between ON Semiconductor and Sony
Can any of the company-specific risk be diversified away by investing in both ON Semiconductor and Sony at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ON Semiconductor and Sony into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ON Semiconductor and Sony Group, you can compare the effects of market volatilities on ON Semiconductor and Sony and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ON Semiconductor with a short position of Sony. Check out your portfolio center. Please also check ongoing floating volatility patterns of ON Semiconductor and Sony.
Diversification Opportunities for ON Semiconductor and Sony
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between O2NS34 and Sony is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ON Semiconductor and Sony Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group and ON Semiconductor is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ON Semiconductor are associated (or correlated) with Sony. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Group has no effect on the direction of ON Semiconductor i.e., ON Semiconductor and Sony go up and down completely randomly.
Pair Corralation between ON Semiconductor and Sony
Assuming the 90 days trading horizon ON Semiconductor is expected to generate 184.44 times less return on investment than Sony. But when comparing it to its historical volatility, ON Semiconductor is 17.56 times less risky than Sony. It trades about 0.01 of its potential returns per unit of risk. Sony Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 8,817 in Sony Group on October 12, 2024 and sell it today you would earn a total of 3,973 from holding Sony Group or generate 45.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.79% |
| Values | Daily Returns |
ON Semiconductor vs. Sony Group
Performance |
| Timeline |
| ON Semiconductor |
| Sony Group |
ON Semiconductor and Sony Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ON Semiconductor and Sony
The main advantage of trading using opposite ON Semiconductor and Sony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ON Semiconductor position performs unexpectedly, Sony can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sony will offset losses from the drop in Sony's long position.| ON Semiconductor vs. Unity Software | ON Semiconductor vs. HCA Healthcare, | ON Semiconductor vs. DENTSPLY SIRONA | ON Semiconductor vs. Omega Healthcare Investors, |
| Sony vs. PENN Entertainment, | Sony vs. ON Semiconductor | Sony vs. Metalurgica Gerdau SA | Sony vs. Monster Beverage |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.
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